Closing puzzles landlord

He says Gap store appeared profitable

The decision by California-based clothing retailer Gap Inc. to close its downtown Athens store has left the landlord for the East Clayton Street building asking why.

''They had a lease option for five more years, but rather than exercising that option, they decided to close,'' said David Poer, an Atlanta businessman who with Athens attorney Howard Scott owns the 155 E. Clayton St. building where Gap operates.

''They never communicated to us as to exactly why they were closing,'' Poer said. ''I'm at a loss. We didn't receive what I would consider a reasonable answer (to closing).''

Gap Inc. had operated its downtown Athens men's and women's casual clothing shop since August 1991, but confirmed this week that it would close the 5,837-square-foot store, possibly as early as next month.

Gap was downtown Athens' only national retail clothing store. In 1999, the company opened Gap and Gap Kids stores at Georgia Square Mall, and one of its Old Navy clothing stores on Atlanta Highway. Those stores will remain open.

Gap Inc. officials said the decision to leave downtown Athens was made as the store's lease was coming up for renewal.

''We do have another and larger store in Athens (at Georgia Square Mall),'' said Gap spokeswoman Claudia Hawkins. ''As part of an ongoing real-estate strategy we chose to close the (downtown) store and stay with the bigger and better store.''

Hawkins said she did not have any specific information regarding when the downtown location would close.

Poer said the lease agreement he and Scott had with Gap Inc. included a ''percentage override,'' which means a tenant pays the base rent and a percentage of profits beyond a certain level agreed upon by the two parties. Based on that arrangement, Poer said he understood the downtown Gap to be a profitable venture. He said the Gap store paid significant override rent for the last several years.

''Up to two years ago sales were extremely high for that location. On a national average Gap did way above what a typical store does,'' Poer said. ''They (sales) did decrease some when Gap opened a store in the mall and their Old Navy store. Even with the decrease in sales, it was my understanding that the store was still profitable.''

Poer speculated that Gap Inc. was closing the store to help boost sales at the mall location in the coming year, in order to reflect a better bottom line report for the newer store.

''It's like they're cannibalizing their own sales,'' he said. ''They took sales from downtown and transferred them to the mall and Old Navy outlet, I guess. By closing this store (downtown) they can boost sales at the mall. Wall Street likes to look at same-store sales increases.''

The base rent fees for the Gap's East Clayton Street address were between $16 and $20 a square foot, Poer said. He added that he and Scott had even offered Gap representatives some ''very attractive'' concessions on the rent to extend the lease a year and see how sales went, but that Gap officials never responded.

Asked about Poer's comments, Hawkins said she had nothing to add regarding the company's reasons for closing the downtown store. She also said it was company policy not to comment on sales in particular stores, and she said she could not give any numbers regarding what percentage of Gap stores are in malls compared to free-standing locations.

Poer said he and Scott are trying to find another retailer to go into the East Clayton Street building when Gap leaves.

''We are doing our best to replace Gap with another retailer,'' he said. ''It is not our desire to put a bar or restaurant in that space.''

Poer added that he had already spoken to a couple of national retailers who have turned down the opportunity.

''Unfortunately, we're not in the best shape in terms of the economy as far as all these retailers are concerned,'' Poer said.

This article published in the Athens Banner-Herald on Friday, July 13, 2001.